We use cookies on this website, including web analysis cookies. By using this site, you agree that we may store and access cookies on your device. You have the right to opt out of web analysis at any time. Find out more about our cookie policy and how to opt out of web analysis.

Does emigration increase the wages of non-emigrants in sending countries?

Emigration can increase the wages of
non-emigrants, but may eventually lead to lower productivity and wage
losses

Elevator pitch

How migration affects labor markets in receiving
countries is well understood, but less is known about how migration affects
labor markets in sending countries, particularly the wages of workers who
do not emigrate. Most studies find that emigration increases wages in the
sending country but only for non-emigrants with substitutable skills similar
to those of emigrants; non-emigrants with different (complementary) skills
lose. These wage reactions are short-term effects, however. If a country
loses many highly educated workers, the economy can become less productive
altogether, leading to lower wages for everyone in the long term.

Key findings

Pros

The short-term effects on wages are
larger, and positive, in sending than in receiving
countries.

Emigration can boost the wages of
non-emigrants because the option to emigrate gives them greater
bargaining power.

Emigration leads to labor shortages
in the sending country, so the greatest wage increases are among
non-emigrants with skills similar to those of
emigrants.

The wage response to migration is
larger in sending countries than in most receiving countries, in
part because sending countries are on average smaller than
receiving countries.

Cons

The positive average wage effects in
sending countries are short-term effects.

Low-skilled non-emigrants experience
wage decreases, because their skills are complementary to those
of the high-skilled emigrants.

In the long term, a country that
loses many educated workers can become less productive, lowering
wages for everyone.

If some regions have more emigrants
than others, non-emigrants may move internally to fill the gaps
left by emigrants, dampening any wage effect.

Author's main message

Emigration can change the wage level and
distribution in sending countries. These effects are larger than in
receiving countries. In the short term, emigration leads to labor shortages
that increase the wages of non-emigrants with skills similar to those of
emigrants (generally high-skilled workers), while lowering the wages of
workers with different skills (often low-skilled workers). In the long
term, however, the wage effects can be negative. Since low-skilled workers
in sending countries generally lose from emigration, policy should focus on
helping workers adapt, so they can fill the gaps left by high-skilled
emigrants.